greg is working on the weekend eurozone finance ministers are set to meet that are day for talks on greece. varoufakis says his cut -- country has been to over backwards. >> the country's longest ever bull market has teach. >> taxi drivers in paris stage violent protests, they call the low-cost cab apps illegal. ♪

francine: welcome to "the pulse." >> also coming up this hour, we will be speaking exclusively to john paul. francine: bailout talks are extended into the weekend. ryan chilcote is in athens. hans, public leanne privately the two sides are very far apart. hans: they are hard apart on substance and rhetoric it is hard to see how they come together unless someone makes a compromise or something ultimately changes in the negotiations. taking a step back, it seems like we have the technical talks there are differences what percentage goes to gdp, what percent of taxes will there be? the big overarching question is, will you have a deal that comes out of these summits that

include debt relief? that is what athens clearly wants. the two sides are very far apart. we just heard from a slow back finance minister, -- slavic finance minister. he did not say when. yesterday, the ecb president said -- talked about the institutions need to stay united. >> there are potential consequences. we agree on the current process negotiations. we agree there is no need for another euro summit. leaders expect the eurogroup to conclude this process by today. hans point for an indication

just how far and how badly talks have been going, yesterday at the met alexis tsipras tried to bring up greece, the only thing that was allowed with a progress report. it was a progress report without much progress. manus: we are going to ryan right now. ryan, what is the varoufakis saying? what is his point of view? ryan: he is saying that greece has already been to over backwards -- a bent over backwards to make -- meet strange demands from creditors. but he will not sign what he sees as a unviable deal. he said it would be absurd to cut them further. the key point is this is not mr. varoufakis speaking on his own behalf a majority of the people

in the prime ministers party share that sentiment. we heard from the greek prime minister himself yesterday who clearly thinks there is a chance that creditors themselves will back down. have a listen. >> i think european history is full of disagreements, negotiations, and compromises. after the great proposals, i am confident we will reach a compromise that will help the eurozone and greece overcome the crisis. ryan: the primary risk to getting a deal done is not actually with the other euro zone leaders, it is right here in greece and with the parliament. they say it could be messy to get a deal through. varoufakis also said this morning that so far they have been a champions.

they have been a champions of austerity. they came into power, brought into power to end posterity -- austerity. they clearly pushed what the creditors already offered to the parliament, he would have to -- he wants to get his own party and the electorate put him in power on the board. somehow this will be half -- somehow this will have to be reconciled. one way to do it would be a messy realignment of powers in parliament. is the greek prime minister ready to do that? we just don't know. francine: where are we on capital controls? ryan: the banks are open. there are no queues outside of the things. this is been going on for a long time. it will be interesting to hear what happens with the ela. the ecb has been working with

the banks, the depositors have pulled out of the banks. the ecb has stepped in with the ela funding of until now. they have a $90 billion tap on funding as we speak. on tuesday, if there is no deal one has to wonder if the banks here are actually solvent. one of the prerequisites for ela funding is that the bank be sold and -- solvent. anything that we learned from the ecb or bank agrees -- or bank in greece about that is key. where we are in terms of deposit withdrawals is this a window. the more the ela provides, that tells us the greek people are pulling more money out of the banks. the theory is if there is no

deal at that meeting on saturday, what we might have is the banks shut on monday because greek banks are running low on money. francine: thank you. manus: tesco shares are climbing after the retailer released better-than-expected sales rosario -- result. a lot of questions to answer. asset sales, executive pay out, a lot of protests over his pay review, here we have a close look at the issues on the agenda. caroline: if you're looking at the numbers you could think that perhaps dave lewis could hold his head high as he walks into the meeting. the u.k. comparable sales, down 1.3%. many thinking it would be a 2%

decline, better than the previous quarter. it is the best result we have seen in a year for tesco in terms of sales. we are starting to see a turnaround, volume in particular, the amount of customer transactions rose for the second straight quarter. we are getting people coming back and resource. what are the tactics that david took? they are trying to streamline and make it seem less -- seamless and obvious what you are getting when you going to tesco to buy. they are whittling down their array of products. they are cutting prices. they are reminding us why we going to tesco.

it is working, they are outperforming in the latest results. they have beaten the other three key players. they are managing to show better like for like sales overall result. clearly they aren't on the upward trajectory -- they are on the upward trajectory. the key concern with tesco, they had their debt rating cut earlier, it is no longer investment grade because of its debt pile in excess of 12 billion pounds. they are dealing with that by streamlining their business in terms of assets. south korea could earn them up to 5 billion pounds. we went to know where those sales are going. some of the private equity players were looking at south

korea, what price of a talking about? other players are interested. dave lewis said he is not going to speculate on that. the accounting scandal, that almost cost them more than a quarter of a billion pounds. what about the repercussions? how to the ensure this will not happen again? previous executive payouts, the previous cfo and philip clarke what about the money they were paid, will be brought back if they are found to be doing any wrongdoing and accounting scandal? -- in the accounting scandal? manus: let's look at the agenda.

francine: chinese stocks have plunged as the country's ever -- country's longest bull market go down. the shanghai cop as it dropped 7.8% -- shanghai, is it -- co mposite dropped her it -- dropped. manus: the investigation into the minor deaths deal with the unions. grexit we welcome the release of the report, we have all been waiting on it. we believe it is a vital step in a process. francine: the french president has called the low cost cap app,

uber illegal. cabbie is are angry because a cab ride in paris can cost a lot, but there is no obligation for uber drivers. tweet at us. we have been getting good responses, tweet to us what you think. manus: amazing pictures. that is a picture of courtney love. let's take a look at what is coming up on "the pulse" today. richard reid, he was one of the leading british figures who called on david cameron. we will get his take on brexit debate.

francine: we will be joined by luke johnson and get his thoughts on the eu referendum. manus: we will speak to these former ecb president from paris. stay with us right here on "the pulse." ♪

manus: welcome back to "the

pulse." francine: as europe's holds its breath to see whether greek -- greece will make it payment at the end of the month, of greater concern is the bond held by the european central bank which matures on july 20. what are the ecb crisis rolls -- rules? we are joined by jean claude pingat. thank you so much for joining us. i know no one wants to see greece go, but as positions are hardening, do think there is a chance for a deal in the next seven days? >> first of all i would say it is very complicated. there are problems. the political problem with

greece which everyone knows the problems with the creditor friendly countries in europe which is also big because you have to go to parliament, you also have to commit parliament and taxpayers it is a good plan. you also have the problem of the global level because you have to get the imf on board. i hope profoundly that they will make it because of course it is by far the best solution to have a good plan, a plan which would be credible. it is history in the making, and i would say we have to take into account is in the hands of the government of greece. manus: good morning, it is manus . you say credibility is the key thing for a plan for greece.

varoufakis says that greece is spending over backwards and it is the nation's hardening their position. is there the promise of a debt relief for the greeks? >> the creditor countries were forthcoming. they have financed greece over the last five years with a lot of money. not only france and germany also spain, ireland, also portugal. all of these things have to be taken into account. that being said, if we have a good plan which is key then everything becomes more easy,

particularly the debt outstanding could perhaps be extended. the interest rates lowered. it is possible to solve many problems as soon as you have a good plan, a credible plan a plan which would be considered credible by the greeks themselves and the international community. francine: if you look at a credible plan that you are talking about, you have ring size so far apart -- you have to bang -- five so far apart. we understand once greek citizens with inter-the euro. >> it is clear we have a problem

in greece, it is communicated in honestly -- enormously. if there is a credible plan, in the eyes of the household of the investors in greece, of the enterprises in greece, it is also considered credible by the international community, then we are on the same side. neither one has to given -- give in. of course there should be a consensus on the fact that we have a good plan, if we do not have a good plan, nothing will work. manus: the european central bank on a daily basis reviews how much liquidity it provides to the greek banks we are waiting for the confirmation for today. there are concerns about the risk, the potential for the ecb financing greece. is the ecb behaving responsibly?

if the imf does not receive their payment, should the ecb continue to finance greece and that hiatus. -- in that hiatus? >> one decision was to consider as soon as the greeks say they will not pay off the debt they would not be eligible for any more. they are looking at the ela on a daily basis as far as i understand in order to be sure that they don't do anything which would be contrary to again be good plan which is necessary. it seems to be that the ecb will immediately take the appropriate

consequences from the situation whether there is a good plan that is recognized as a good plan by the international community or whether there is no good plan. the ecb does exactly what it should do in my opinion. francine: you don't think it should be tougher? you seem to be tougher on ireland. should mr. draghi to be same -- do the same? maybe they should be tougher? >> we are permanently tough on our recommendations. tough on our advice, and to adjust when necessary and where necessary. it is absolutely clear that the ecb has always been up to this

extraordinary situation with all countries. only to speak not on the country's only in major difficulties but to speak of all countries in europe which are benefiting from the policy. it reinforces the case to asked all of them to embark on structural reforms and on the cleaning up of the houses that is absolutely necessary. it is truthful in japan, the u.s., and the u.k. the policies of the central bank are giving time for the other partners to the house in order. manus: let's talk about the armageddon scenario. and -- and asked -- an accident might happen. are the firewalls in europe sufficiently strong to deal with the unwanted policy --

possibility of a greek default? >> i must confess that i did not catch the question. the greek default would be a catastrophe for greece and the greek people first, by far. they would also be a problem for not only europe, but the international community. what counts is to have a good plan a credible plan to avoid this catastrophe. my understanding is that there is still a good chance to get a good plan. we will see it is history in the making. francine: do you think, let's say we have this armageddon in two weeks, greece has to default and leave the eurozone is it

positive or negative for your -- for europe? >> is a grexit negative or positive? francine: for the euro currency. >> i think it goes without saying it is not good when you have such an event. that is the reason why it is not my working assumption. my working assumption is not that we will be in this avenue of the grexit. if you want me to tell you what it means, it would mean that the europeans are not able to be sufficiently effective to have only 2% of the gdp euro area behaving properly, the incredible, and being able to

surmount the difficulties of the time. it appears it is possible for such a small country, then what about all of the other countries that the european union are supposed to anchor? what about all of the other countries? what about the consequences in the balkans which are shaky. what about in the region taking into account what happens in the middle east? i think that there are geopolitical elements that need to be taken into account. that does not give greece the right to blackmail the other partners. it is in the interest of the greek people, the greek job creation, as well as the rest of the world that we have a credible plan. it is not a new question. i have known that all of the

world. we had many countries in the situation. at the end of the day they understood. francine: i hope they also understand. thank you for joining us. ♪ . .

francine: welcome back to "the pulse" arrive in bloomberg's headquarters in london. i'm francine lacqua. >> i'm manus cranny. let's get a little bit more from the european central bank president, jean-claude trichet. he is with us in our paris studio. let's broaden the conversation a little bit. you talked about stimulus around the world in the earlier part of interview. let's go to china. the deep root of concern for markets and most people in the world is china and its ability to sustain growth. how concerned are you about china?

do you expect more easing to come from them? >> first of all i would say of course we have to be used to china going a little less flatteringly than was the case before. something like around 7% or even a little bit below 7% as in their last projections of the i.m.f. going at 6.8% or 6.7% would be extraordinary. we just have to hold normal. after many years, at two figures growth it is not absolutely abnormal there is some kind of slowing down. the problem in china are probably much more i would say overhaul credit that have been made to a lot of local authorities, state-owned enterprises and the cleaning up of all of this is very, very important.

it has to be done. i would expect that the present period would be a period of cleaning up of a number of i would say abnormal situations, abnormal financial and credit situations. it seems to me that the work has started. francine: what is your biggest concern, mr. trichet? a more normal, stable economy has started. we're also talking about greece and whether there is a concern although there is a recovery, greece holds the e.u. recovery hostage. then we have the fed coming up at the end of the year with a possible interest rate hike, or even in september. if you look at the world economy, what is your biggest concern? >> when i look at the world economy, first of all, i'm struck by the fact that -- take the i.m.f. for instance. as an example. you have more or less growth

which is not very flattering. nevertheless we have steady growth in emerging economies with india more or less offsetting the slowing dounch china and also in the advanced economy with the economy, they are being a little bit more dynamic than was projected before and the u.s. becoming a little less dynamic. all of this is more or less upsetting. of course what we know is that we have new challenges that are coming and i would say in this period, resilience of all the global economys is of the essence. the world is continuing to transform itself and technology are part of this transformation. let's be resilient. particularly in the advanced economy which have moved a great level of fragility.

let's do the structural reforms that are of the essence. manus: reinforcing the resilience brings to mind the world is getting ready for this potential rate hike from the federal reserve. madam yellen is telling us don't worry. it is going to be a slow-paced hiking cycle when it comes. what do you make of her guidance and the challenge for the world and the markets if and when the federal reserve raises rates. will they raise rates in september? what is your thinking? >> first of all, i would say whatever the fed does, it is criticized. when the fed embarks on q.e. , it is heavily criticized. you might remember that. when it puts interest rates at zero it is very criticized. when the fed is tapering it is also criticized.

when it is starting to be put in a position to increase rates, it is criticized. i understand that pretty well. it -- these are decisions justified by the responsibilities of the fed but has an immense unless on the rest of the world particularly emerging economies and it is not exactly what the emerging economies would do themselves. i would say it is good news that the fed is envisaging to increase rates. it means that the u.s. economy is doing better. that is obviously good. i trust the open market to take the right decisions in the circumstances. francine: you are sitting in paris. we have to ask you about your thought on the uber protests. is it just symptomatic of a europe that needs to reform and

focus more on the consumer or is there truth in what president hollande has said? >> well, if you address the question of i would say competition and competition in the service economy, i would say that the taxi driver in france has always been considered a sector which is particularly -- and practically all of the reports that were produced over the last years have underlined that it was a close job which was not functioning correctly. so i'm not surprised, frankly that the impact of new technologies the impact of new apps, new technologies with the smart phones and so forth is creating particular difficulty because we had a very real sector. i hope very much that the technology and all of the discussions that are taking place modern size this sector.

in any case technology will proceed. it will continue to gal up, if i may, all over the world. those who ignore technology would be making many mistakes. francine: mr. trichet, thank you so much for all of your thoughts. jean-claude trichet. the former european bank chairman. manus: richard branson told bloomberg that the idea of britain leaving the european union is terrifying. he called on david cameron to keep the u.k. within the union. >> i've been in business for 50 years. the idea of britain leaving the european union is terrifying i think from great britain's point of view. and from business point of view.

it is important to speak out as did a number of other business peep. a lot of significant people alongside you. that is one of the many voices. we go through this process over the next year and a half. >> if i can say one other thing on it. >> yes. >> when i was a young man, you know, my father had been to war in europe. my grandfather was gassed and had been to war in europe. my great grandfather had been to war in europe. almost every generation has been to war in europe. we would never dream that we would be fighting germany or france ever again. i think it is largely because we are one common market in travel we can marry each other and live anywhere. that is something that should be emphasized as well. we want this wonderful community of people to stay together

united and not get back into the horrors of past generations. manus: that is david and another businessman. richard reid joins us now great to have you with us this morning. sir richard is terrified. he is looking backwards in time and said you have got to be in the room. you signed the letter as well. is cameron making progress? what is your take so far? >> it is a tough situation. but i back the guy. we are in a strong position. we are members of the e.u. it has been brilliant for the u.k. economy and society. fundamentally, we should and we must stay in. it would be a crazy illogical disastrous step. francine: because of terrorists?

as a businessman and entrepreneur. all of these big banks are going to leave london. people will poult. why would you invest in this country? fundamentally, we haven't seen that many real figures saying how much the country would lose. >> actually, if the e.u. says the same thing, g.d.p. would go down. francine: initially. >> initially and then what. if you ask your reason for coming out, there is not any economic rational to it. we still have to have trading relationships with the e.u. rather than the thing we have already got, saying we can try to negotiate back to the thing we already have. being disadvantaged but not one of the main guys around the table. if you look at the economics, the benefit, the big part of the e.u. makes absolute sense.

i have a huge personal experience from the benefit oifert. years ago my friends set up a business serving smoothies. 17 years later it is a billion dollar brand because we have the ability to trade with the rest of europe. actually amazing for our business, thank you very much, but also for the u.k. economy. 50% of the smoothies we sell are to europe. 80% of the people we employee as a business are here in the u.k. we're selling smoothies over there and creating jobs over here. manus: try and translate to me this argument that businesses is labored with regulation and costs from europe. you have been in business for 17 years. are you burdened? are you held back? >> every bit of regulation is going to affect someone. you have to remember it is not

brought in for amusement purposes. it is always brought in at least with the aim of making society better. yes. with e.u. legislation that came and affected our business, every single piece of it. i read it. ok it is a little bit annoying for business in the short term but good for society in the longer term. it is going to ultimately be good for business. you can't make claims that you can't substantiate. as a human being, it is a good idea. it was good in the long-term interests of everyone. francine: what about renegotiating? what cameron is saying is he is for staying within the e.u. but fundamentally, we have to cut the red tape and some of the things that affect this country which doesn't make sense. not all regulation makes sense. how do you -- how would you renegotiate? against this idea that the

european union is going to come ever closer or just on the kind of you know red tape? too many people in brussels paid too much to do too little? >> i always think about let's go for the upside first. what is the e.u.? firstly it is about economic har monoizeation. let's gets the e.u. and negotiate more of the good stuff already. there is the free trade agreement extended to every single industry and country. i think that is absolutely number one on our message to david cameron. i know he wants to extend all of the free trade agreements. i see the e.u. as a great opportunity to stop multinational businesses essentially gaining legalities of whether they pay tax or don't. we should be united. we're half a billion consumers.

when you make profits, pay your fair share. manus: uber is protesting against change. against improving things for the consumer. that is the imagery that we're dealing with here in the united kingdom, isn't it? it is that anti-desire to change. >> the truth is change is pain. pain is growth. and it is all mixed together. growing pains. there is going to be some changes. you have to fundamentally work on what is the best for the most people? what serves the public good? it was great what branson was saying. it is good for business overall, it is good for the commesm it is a myriad of a social benefit in terms of the integration the ability -- to marry who you like. to live where you like. as a business, in the u.k. with

offices in every european country. anyone can go and work anywhere. i have british people working in france. that was not always the way. countries would kill for that freedom of movement. do we want to be like switzerland? i have a good friend who is a swiss entrepreneur who recently moved to london to set up her business so she can trade with the e.u. it is simpler to do that. she is leaving switzerland as an entrepreneur. i don't know -- i love switzerland. it is a lovely country. francine: it is not their fault. it is because they are so popular. they can't pay interest rates like -- richard, give us a sense of how you see it in the u.k. and what you would want from

chancellor osborne in the budget report? >> new topic. as an entrepreneur, what you want, essentially what i believe the previous coalition government is delivering is a stable maker environment. -- macro environment. the wired economic context. you essentially want to ability just to get on with things. that's what i ask. i think the guys do a good job. it is the same with the e.u. it is the ability -- as an entrepreneur, you just want to be able to get on with it. get into market. anything that gets in the way of that, not helpful. a level playing field where we can go where the consumers are and give them what they want, good for business. francine: thank you so much. manus: halfway between a race and a video game. that is how the c.e.o. of formula e describes his sport. and it is the first season.

it comes to a close london this weekend. bloomberg has been getting the lowdown on how it is implementing digital format to attract the younger audience. >> i'm the c.e.o. of formula e. the new global -- many people come from formula e and formula one. formula one has been there for a long, long time. formula e is a different concept. it is targeting a different generation. using a different technology. getting to new audiences. the traditional audience watches television. the younger audience watching more and more content through their mobile device and computer. we need to get to that generation. it is not easy. it is that's why we have where fan consist interact with the race and have anfect on what is going on in a real sport and that has never happened before.

probably we see the race as something halfway between a race and a video game. we're going to include new things in its. fun is one thing obviously. for fans to vote. get an additional boost of energy during the race. they can use it whenever they want. giving the fan the first time ever to have anfect on the results of a sport. what the drivers need to do is be on social media. they can have them in every race. the communities are being basically born among the top contenders. so people like to be in the game to win. and it is funny if you're not on top, you start quickly losing votes. if you're one of the people fighting for the race. more people vote for you. what is important because needed

something new. we are a group of people that felt it was important to create something to make mort sports relevant again. francine: all right. i love formula e. positive news from tesco this morning. they reported their smallest sales decline in at least a year beating expectations. manus: good news? francine: here to assess their turnaround, the managing director. great to have you here. for me, one is in terms of spinoffs, what tesco is going to do. the other is growth in asia. where do you see the biggest positives? >> the biggest positives are about the u.k. the fact is a year ago you would have thought their business is declining at a faster rate. the business is still declining, just declining less than we thought. the challenges are severe. ultimately you still have the fastest base in the market, an

oversupply market. most of these guys the likes of tesco still run huge stores. they are getting the house in order a little bit in terms of better availability. clearly helping short-term. long-term outlook still cloudy. there is the growth regrowth for this business. i find it really interesting that we have -- we were told earlier that tesco would not sell asia. the profitability is going to be low for a long time. the balance sheet therefore at this level needs to be shored up. you just have to wonder beyond hopefully getting the u.k. to a decent level of profitability, how does this business grow? manus: it is interesting. that's step one. isn't it? forgive my ignorance here.

that is step one isn't it? >> the whole industry is facing a severe structural challenge. we were thinking is -- look, this business is making a 1% margin. it is terrible. it needs to make a 6% margin. we're talking about targeting 1% 2%, 3% and staying there hopefully. right now the am sbigs about to be flat. all of this stuff we're celebrating actually is flat line. francine: what will you do if you're in charge? what is the next step? >> i think the problem tesco has is that a lot of space here that frankly is under performing, there is way too much exposure to large stores. francine: super stores. >> too much exposure to convenience stores. i think they are in a bad place.

the fact is even convenience stores are getting to the stage where everybody is falling over each other to open convenience stores. you have two or three tesco stores next to each other. sainsbury's is there. whole foods is there. that dun sound like a formula to add a lot of success. i think the next issue is going to be convenience stores. there is too many convenience stores eventually as well. manus: that takes us to the online proposition. you and i are falling over one another in our neighborhood between tesco and sainsbury's. online, is that the proposition? >> that is the hope. the hope rather to go to sainsburies, you buy off tesco online. in some ways, tesco better than morrison's.

manus: if you're already leading how do you build on that? >> it is one of the things he should do. let's face it. the fact is i don't want to overdo it. it is the market leader in this market. a lot of us shop by location. tesco still had 30% market share. so some of it is simple fixing. stuff just wasn't in the stores when you went in. that is what he has done. tezz bit. the problem here is the incremental space that is opening up again. that tells me that you have to compete harder to keep people from going away. forget about winning market share. francine: thank you so much. manus: when it comes to german corporates it is not just greece that has been weighing heavily on share prices. the dax has been the worst performing benchmark in this quarter so far. what has been troubling germany

inc.? alex is in munich with a little bit more. what are the big issues? that the germans don't like change perchance? >> yeah. i think you have it on the head there. they have essentially been slow to react. it is a changing business environment. the classic example has been deutsche bank where they replaced the c.e.o.s. the one that brought in is the former c.e.o. at u.b.s. there is a list of other huge companies, siemens, lufthansa who are enjoying similar issues. francine: why have german companies been slower to react than some of their competitors? >> there are possibly two almosts to this. one element is that germany has been very successful in the past five or six years. that might have made them

complacent and arrogant. in germany you have a system of companies clschs done jointly with the labor representatives. that can make it harder to push it through how you're going to run a company. they don't want job cuts or market factory and production to be moved elsewhere. that is perhaps one of the reasons. manus: just the trend that you're referring to, how does it fit into the broader german context? >> i'm sure you have been talking about this with people for sometime. everybody niece one of the big drivers for germany's success in the past five, six years was the program of reforms introduced about decade ago by the former chancellor.

2010. there is a growing chorus of economists and business executives saying what is coming next? we need a new agenda 2010 and 2020 and 2023, perhaps increasing the retirement age which will make it easier to do business and of course then reduce costs and react more agilely to changing economic circumstances. francine: thank you so much for your time. for those listening on bloomberg radio, first word sup next. for our viewers, the second hour of "the pulse" is coming up. manus: we will have luke johnson in the studio with us. we have a lot of content to get through. from greece tesco, productive fifmentuber is your favorite story of the day. francine: uber goes back to greece and the oppressiveries and the structural reforms that we don't seem to be passing

through when you're -- also interested because of the capitalism. there is a huge -- going on in london. we speak with linda roth child coming up at 10:30. ♪

manus: working on the weekend. eurozone finance ministered are set to meet saturday for crunch talks on greece as varoufakis said his country has bept over backwards for creditors. francine: taking the tumble. 2 country's longest ever bull market has peaked. manus: uber anger. taxi drivers in paris stage violent protests. president hollande called the cab app illegal. francine: good morning to our

viewers in europe. good evening to those in asia and welcome to those just waking up in the united states. i'm francine lacqua. manus: i'm manus cranny. this is "the pulse" live from bloomberg's european headquarters in london. francine: with the greek prime minister, we have been talking about him over the last few days. alexis tsipras and european creditors have continued bailout talks into the weekend. manus: ryan chilcote is in athens for us. it looks like everybody is going to get a little bit of break time before they go into the last marathon which begins tomorrow, we hope. greek government perspective. give us some of the new top lines. mr. varoufakis and our headlines. we are bending over backwards for you guys and girls. ryan: that's right, you know. perhaps it is not a surprising line from varoufakis, the greek finance minister also saying

that their commitment to the eurozone is rock solid. but you know, they can't be asked for example, as he puts it cutting already small pensions in this country further. he said that would be absurd and they won't sign a deal that is unvieable. he said greece has been the champions of austerity. i think what is important as he says these things is to view them not just as varoufakis' point of view but really the point of view from the greek prime minister's ruling parties and the idea is that these are the guys that were brought into power to end austerity and what they feel that they have on the table thus far just doesn't go far enough for them. they feel it really smacks of what they had before and maybe, just maybe, they say they want to deal -- they want a deal, no deal would be better than the deal that is on the table now. the e.u. seems prepared to possibly negotiate. who knows? there is always so much rhetoric

before these meetings. what actually gets decided difficult to say. an e.u. official just said two proposals, one from the greeks and one from the creditors, where they are on the same page, those two need to be merged presumably that is what is going to happen at the euro-greek meeting tomorrow. francine: ryan, what is the feeling on the streets? we're waiting for e.l.a. for the person on the street, we were talking about this yesterday. for me to put it simply, mr. tsipras has to decide to back his people or actually back his party. ryan: look i think the main points are there is no panic on the streets. this is not armageddon. the greeks have been walking around for the last five months and you walk around central athens and it is pretty much business as usual.

there is a feeling that things are getting slightly more dangerous, there is not a lot of criticism of the greek prime minister. i was talking about how needs to his party to support this. at the end of the day the people that voted for him wants him to get a fair deal. as far as i can tell, they are so far onboard with him. have a listen to one couple i spoke with about an hour ago. >> i think we'll get a solution after next week. so i'm pretty confident that things are going to be fine. i hope. ryan: what do you think about the greek prime minister? >> everyone is supporting him. actually we all don't know what's going to happen. we just hope that everything is going to tournt well. but we support the government. we support mr. tsipras and we just hope for the best. ryan: the surprising thing is if

the greek prime minister wanted to, he could probably get what the creditors are proposing through the parliament buts his own party and electoral base behind him. that is what this is going to come down to. if gets a deal in brussels, he has to sell it to his support base here and that may not be so easy. credit suisse said that might require a messy realignment within the party itself. back to you. francine: hans nichols is also joining us from brussels. it seems that actually the two sides are hardening their stance. how difficult is it going to get to get an agreement? hans: well, it depends on what we're talking about. if we are talking about making the numbers add up, it seems like there is a way forward there. if greek proposal and european proposme need to be merged. the greek po postal more

importantly needs prior actions. whether or not anything that comes out of that saturday meeting will have anything for debts reduction. the greeks are insisting explicit timelines. debt is 100% of g.d.p. the germans are saying that can only be dealt with afterwards. what we have here most recently is that prior actions need to be included in the proposal. those are things that greece would affirmatively commits to get things done in a public way. we have heard it is important to have a reform package. you're not just talking about spending cuts. you're talking about structural reform. the way the greek economy and greek society operate. one other quick note. it does look like hollande and merkel as well as tsipras will be meeting here on the sidelines of the summit. they continue to be here, the

leaders. remember on saturday, the euro group meets. those are all the finance ministers. francine: hans nick nols brussels. manus: tesco has better than expected sales results. the first annual meeting kicks off at 11:00 a.m. give it a closer look with caroline. caroline: up 20% so far this year. because a turnaround is upon us. we are starting to see better than expected sales. sure, they are still falling. the u.k. sales for the bulk of this business were down 1.3%. but that was a beat. many thought it would be worse. in fact, it is better than the last quarter and notably it is the best quarter in at least a year. also, if you're looking at the value side, that is one side

look at the volume. you're seeing the volume of sales, the number of transactionsing -- transactions rising. up from 1.3%. why are people suddenly coming back to tesco? what tactics have been employed by dave lewis who has been at the helm for almost 10 months. we don't want hundreds of thousands of types of soap. they are starting to make it more streamlined and an easier process to go shopping. they have cut prices on 300 items in. they are trying to remind us why we originally went to tesco. it is because of the price point. sparking a bit of a price war with morrison's and sainsbury's. but it is working. they are doing better. the last quarter their sales were better than their key competitors in the u.k. space.

dave lewis has been at the helm for 10 months but he has had scandals. he is trying to turn it around but shareholders want answers. this is the first time he goes for an annual general meeting. they want updates on the debt pile. 12 billion pouns of debt. how are they managing to bring that down and get back to an investment grade rating. we got an update that private equity companies were paying bits into their south korea unit. 2 billion pounds is the price point tesco wanted. would they be up to spending that sort of cash? that is not what investors want to hear already. i wonder if he will give

anything to his shareholders. it is also an update on the accounting scandal. more than quarter of a billion pounds worth. a black hole they found. what about the culpability? are that in any way responsible for that scandal and should they still be hanging on to the payouts given by tesco? these are some of the questions i'm sure he will be feeling in less than an hour. francine: joining us to talk more about tesco and the challenges that the u.k. businesses face in the u.s. and other overseas markets is luke johnson. luke, we're delighted. we're keeping you for 40 minutes and talking about everything and anything under the sun. good morning. when you look at tesco, as long as it is not too bad they are saying we're giving him time.

he has been 10 months in the job. do you think he could have been more aggressive? >> he could have but turnarounds don't have overnight. i think we're very impatient and expect magic. the reality is that fixing businesses is not easy and often takes longer than we would all expect. i think he is clearly doing the right things. he is changing people. he is looking at relevant disposals. focusing back on the core. he is dealing with the debt pile. he has tackled the accounting issues. so the signs to me are all quite good. i would say most turnarounds of businesses that are troubled take two to three years. he is under a year into the job. so far so good. manus: in retail more so than a lot of other industries because you have got the discounters and

smaller trends coming through. tackling disruption, does that take a lot forsight and planning and brainstorming? >> i think it is a big challenge. the structural changes that are happening in the supermarket industry in this country are very profound. i think for a number of years observers coulden understand why companies like tesco enjoyed operating margins of you know, half as much again or more than they would see in other similar countries. the truth of the measht is that i think margins for supermarkets are revert fog the -- so -- reverting to -- tesco and its shareholder and management almost certainly have got to get used to that because they have the steamroller and all of the other low cost competitors. it has become a much tougher

industry. unfortunately for tesco, they build up a lots of debt. they sold off a lot of their freeholds. they had mess like the american adventure to deal with. i think the c.e.o. is doing a lot to realize 6 or 7 billion pounds through disposals so he can get the banks off his back, you know it is still easily the largest supermarket chain. it is still a highly profitable business. it still has an unrivaled store base. i think this will ultimately be a successful turnaround. we need to buy food every day. every week. the industry is not going to go away. francine: what is your biggest concern? when you look at the puzzle. we have a similar situation in the u.s. should we really worry about it or is it just this kind of shifts because we're transforming into a more digital economy? >> i think that is part of it. we're having to reeducate our

workforces for the 21st century where a lot of the old blue collar-style jobs are disappearing being replaced by machines or outsourcing. so we have to reeducate our workforces to the modern age. i think the particular problem that britain faces that is more acute here than many other countries, in germany or america, we have an unbalance economy focused too much towards london and the southeast which is hugely successful. but many other parts of the u.k. underperform. and somehow or other, we have to address that problem. and it is the regional problem in the u.k. that i think is our biggest challenge. manus: brexit or britain's position in the e. sumbings the top of the agenda. cameron is out lobbying at the moment. i caught up with richard branson. he said it would be a nightmare. we just had mr. reed saying we need to stay. where do you stand on it?

>> i'll tell you where i stand is i don't necessarily listen to someone like richard branson, who although is a wonderful businessman, doesn't actually live and pay taxes in this country anymore. i think it is about u.k. citizens. that should be voicing their opinions. manus: he has a business that pays taxes. >> last time i recall he was in -- i think we want to remain within the e.u. if we were to leave, it would be unfortunate. i do also think the e.u. needs to reform. yet again, the challenges that the high costs western europe faces are profound as angela merkel put it. we have something like 7% to have world's population. 25% of its g.d.p. 50% of its welfare spending across the e.u. that is an unsustainable model. we need to become more efficient

and productive . address the common agricultural policy and the bureaucracy and red tape dealing with issues like employment law. there are many reforms we should like to see of the e.u. if we are to create jobs and be successful into the future. francine: luke thank you so much for joining us now. luke johnson stays with us. we'll be talking about greece and uber disrupters and capitalism next. we're back in a couple of minutes. ♪

francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. manus: let's get the latest on the greek talks. we're joined by the mall spsh maltise finance minister. these meet, we were being told by varoufakis this morning that the greeks had bept over backwards. what is your taken to meetings? is the differences widening? are positions becoming more entrenched? are we further away from a deal? >> i think that this is being a four mf month saga. the -- four-monlt saga. the issue is political. it is very telling that the finance ministers in the euro

group which have been briefed from day one and the 20th of february have received the greek position and the troika's position just yesterday. so four months, you could say nothing has happened from our point of view. they were lost into deciding whether to call the troika at three institutions, where should ministers meet, in their office or paris. now we are trying to do what was not done in four months in a few hours. we might get a deal but whether it is the best deal for all, you know, is very questionable. francine: we're also hearing that the e.c.b. is wanting to leave the emergency liquidity for the greek banks unchanged. what was the mood like or you

know, we hear reports, day in and day out, doors being slammed, people being fed up. proposals coming and going. overall, describe to me the mood over the last three days. >> the ministers behind them, so to speak, they are our eyes and ears and our negotiators. this is how it works. we don't negotiate with the government. we just endorse, approve and of course comment. what was on the table when the greek government was elected was the memorandum understanding which was applied to portugal, spain and ireland. in their case it worked. in greece's case it didn't. however, the greek government refused it. so instead we told the greek

government ok come up with your own proposals and reforms and if they come and adopt to the same targets of the memorandum it is with us. they didn't come up. they came up so to speak just yesterday. then in between, the three institutions just a week ago almost gave up on these negotiation and said let's make a water down m.o.u. package. it was not shown to us ministers, to complicate matters because for bureaucratic regions it was an official document not even agreed to by greece. the m.o.u., the standard disciplined i.m.f. -type of -- and e.c.b. and so on-type of package, the greeks call it the

austerity package. then we have it watered down and we have the greek position. that is yesterday. from what i see, neither of them would meet the target. not a question of agreeing. but of really giving a breath of fresh air to the greek economy to grow and so on. i'll just give an example, very quickly. the greek government wants to increase corporate taxation. how about that for initiatives. and the three institutions want to increase the tourism industry on the islands. there is room for improvement on both of them. manus: can i just interrupt you here. it is manus here. we want to get to the rub of what is causing the lack of agreement. is it that there is no debt relief on the table?

is it that it is all about tax? is it that there are certain positions? what is the stumbling block, five months of negotiations. what is stopping the deal? >> lack of hard data and things on text. you can't get agreements by just word of mouth. and the first time we're seeing a document on paper, what we'll call a hard copy of what the greeks want we were just getting yesterday. they don't carry which is the closers. i think it is a political -- it is a question of how you can sell it to the greek parliament. that is the issue. it is not how much cuts or increases. it is how you can sell it to the

greek parliament. and because there is absence of animation of debt the greek government finds it difficult to sell it. that is issue. hopefully today, all day today and tomorrow before we meet saturday evening, we can get closer in a package which gives some life to the greek economy and also is favorable until the greek parliament. francine: what is the likelihood of an agreement? 50/50 or 70/30 likely of a greek default followed by a greek exit? francine: when it is that close and tempers are short and there is lack of trust, it can go both sides. i'll go for 50/50. francine: all right. minister, thank you so much. the maltese finance minister.

manus: this is crossing the news wires. we have news that one person has died. several have been injured after an attack at an industrial gas plant in the southeast of france. a person holding an islamist flag entered the plant and caused an explosion. francine: this is the heart of where things get made in france. it is the heart of the manufacturing industry. we understand that a person holding an islamist flag entered the plant, caused an explosion. apparently this is according to a.s. bhombings spoke to police sources. a decapitated body was found close to the plant. we'll be following this very closely. it has political implications. we had an interview two days ago with someone sfating their position on immigration and dealing with extremists. it plays possibly into extremist

views. something we're following closely. we'll take a short break and have plenty more on this breaking news and talk about inclusive capitalism. we understand that the french interior minister is on his way to the site. ♪

francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. manus: and i'm manus cranny. here are the 207 headlines. the greek finance minister says his country has bent over backwards for creditors. it comes as finance ministers prepare to meet tomorrow for what angela merkel has called decisive talks on the future of greece. francine: the french president francois hollande, has called uber illegal. it comes after taxi drivers in paris staged violent demonstrations against this blocking access to airports and

burning tires. cabbies are angry because a taxi license in paris can cost more than 100,000 euros, but there's no such obligations for euro drivers. manus: and sir richard branson has told bloomberg the idea of leaving the european union is terrifying. he was among several business leaders to call on david cameron to keep the u.k. within the union. >>y been in business 50 years. the idea of britain leaving the european union is terrifying, i think, from great britain's point of view and from businesses throughout britain's point of view. i thought it was important to speak out as did a number of other business people. manus: a lot of significant people alongside you and i think that that's one of the many voices, and we'll go through this process over the next year and a half we understand. >> i'll say one other thing on

it. when i was a young man, my father had been to war in europe. my grandfather was in europe. my great-grandfather had been to war in europe and almost every single generation has been to war in europe. you know, we would never dream that we would be fighting germany or fighting france ever again, and i think largely it's because we are now one common market. we can travel. we can marry each other. we can live everywhere. and that's something which i think should be emphasized as well. you know, we have a wonderful community of people to stay together united, not get back into the horrors of past generations. francine: we have breaking news. one person has died and several were injured in an attack at an industrial gas plant. this is in southeast of france. this is according to a.f.p. reports.

a person holding an islamic flag entered the plant causing an explosion. a decapitated body was also found close to the plant. we're monitoring all the french news agencies, including the french newspaper saying this happened at the firm called air products. manus: and the french interior minister himself, as we understand it, is on his way to this site, a gas plant. that seems to be what a.f.p. is saying, the site of where this actually took place. so as we get more breaking news on that story, of course we will bring that to you. in the meantime, let's talk to mark. he's got a market check. mark: european stock markets are declining, except for portugal, which is unchanged. investors are waiting tomorrow's fifth finance ministers meeting in the last week or so. the stoxx 600 is up over 2 percent perks the most for a month over a five-day period. this is the market of the day, isn't it?

look at this, the shanghai composite down by 7.4% biggest decline since january. from its peak at the beginning of june, it's fallen by 19%, almost bare market territory. in the last two weeks since then, it's fallen by almost 20%, which means that's the biggest decline since 1996 over a two-week period. that's an astonishing statistic. morgan stanley advising clients to refrain from purchasing shares in mainland china, saying the composite june 12 record high likely marked the top of the bull market. in the bond front today, fairly muted. greek yields, look at that, the 10-year is trading down, italian yields slightly higher. spanish yields are slightly higher as well. euro on track for its biggest weekly drop in a month. if greece is forced to default, sell the euro. if greece stays in the eurozone, sell the euro. that's the message from barclays mitsubishi, who say

what matters for the currency going forward is e.c.b. on purchases. it's all about saturday. francine: it certainly is. and then sunday and then, of course the next either meeting . thanks so much, mark barton. thank you so much for sticking around talking a little bit about tesco. it seems that when you're a traditional business, you look at the disrupt tour and embrace this, but if you're a taxi driver you say how can i position myself, or there's a big danger that traditional businesses ignore this then you're left hanging in a couple of years. >> well, it may not be a couple of years, but i think everyone has to evolve, and that the rise and rise of the digital economy is forcing more and more traditional businesses to alter their model, and i think long term, that's the way it's ever been, you know?

it's in capitalism, where there's new competitors and technology, and they do things quicker and cheaper, and that's good for the consumer t. introduces new entrepreneurs and new ideas. you know, it stops cartels operating, for example you were saying earlier, in paris, taxi drivers have to pay 100,000 euros for a license. that's ridiculous. francine: even more. luke: well, these are wrong, and they should be broken down. in that sense, uber is helping force change as long as the taxi drivers are trained licensed, insure and had so forth. manus: we have hollande calling for it to be made illegal. that doesn't hearten you to structurally reform when you're dealing with one small portion of business, which is you, me, and fran when we're in paris being able to take a cab of our choice. luke: indeed. i think these things are never easy journeys are they? there will always be resistance

and complaining politicians. but ultimately i think markets decide. and if there's a better way of doing things, that will prevail. consumers are very assertive. if there's a bit of option, they will push for it. but i think politicians increasingly realize that you can't hold back the tide. what we do have to do, i think, is retrain our people, and we have to embrace entrepreneurship and try and understand technology and its implications better, and businesses need to be nimble to evolve to cope. francine: when you mentioned markets decide, this is germany. not all countries, especially in periphery europe, have that as their motto or ultimate goal. if the u.k. essentially leaves the e.u., and i want your thoughts on that what does it mean for the europe bloc? you lose a massive force which is for free capital and markets deciding. luke: i think it would be a

tragedy for us and them, so i think that's why we have to push very hard indeed to reform and i think we are a huge trigger. you look at countries like denmark now. they have a more sympathetic government. you heard what the italian prime minister was saying this week. as you say germany is in favor of free enterprise and removing structural barriers to growth. so he have a feeling that, in a way our referendum might be a trigger for the e.u. to really question some of the bureaucracy and things holding back growth and preventing europe reform. you know, it's about addressing the vested interests and preventing them from allowing these countries to expand and be prosperous. manus: when you see how europe is dealing with greece it doesn't exactly golden the hope for radical shakeup or restructuring, does it, when it comes to britain's position or am i misinterpreting? luke: i completely agree with you, and i think one of the great problems is it's so big,

it's unwieldy and almost unmanageable. i think what has unfolded in greece over the last five years in terms of the messy negotiations is not encouraging, i have to sympathize yeah. francine: do we need a stronger leader? but if you have one or two strong leaders then you have a vision, and you actually power through. we're lacking that. luke: also i think europe and the e.u. in various ways lack trarnse transparency. the truth wasn't known, and frankly, greece does need to reform itself. it needs to pay its taxes. they need to deal with pensions and retirement and so forth, because greek remains in the e.u. with all that debt without structural reform. it will still be unable to compete. the problems are not being

addressed. they're just being pushed down the road. manus: luke, you're going stay with us. we've got you in that seat. we've got you tethered in there. luke johnson, stay with us. when we come back, well, how can our economic system be made for he can quitable, sustainable? i like those words. francine: we're also getting breaking news from david con. we're just talking to luke johnson about it. he's fwone germany, so we know that he spoke to the chancellor angela merkel, and he just tweeted he's agreed that the renegotiation of our membership of the e.u. can begin. so here we go. ♪

francine: welcome back. live from london on bloomberg tv. manus: the conference on inclusive capitalism is taking place today. it has investment managers, corporate executives, public policy makers, the list is really quite a quantum list. they're discussing thousand make the economic system more he can quitable sustainable, and more inclusive. for more, we're joined by the c.e.o. of e.l. rothschild, and luke johnson, the man that has stayed with us through this time. lynn, great to have you with us this morning. this is your second conference. you just told us there in the break that you had a message from the pope. i mean your draw is really quite substantial in terms of

the sustain that you propagate. lynn: what i told the people in the room this morning is we had his royal highness prince charles, his holiness pope francis, archbishop wellesley, governor carney, and president clinton show up, and i said they're not here for networking. no no. they're here because there's an important message. in the room, we have the heads of institutions representing $25 trillion of assets under management. that's 1/3 of global institutional assets, and they can make a difference with the way that they invest. francine: and message is not necessarily -- it's a little bit of giving, i guess, more of the wealth to the more unfortunate, but the main message is let's be behind the businesses that do good or that are run in a good manner. lynn: it's really more of the latter. it is let's make investments that give very good financial returns, but that they do that

through taking care of their workforce, taking care of their supply taking care of the planet. and we have a professor who will speak in about an hour from harvard business school who has shown that companies that do those things have better long-term financial returns. if you're a traitor trader, you don't care about inclusive capitalism. but if you're an investor and you want to invest in something you're going to keep for a long time and you're going to deal with management and hold management to account, then you're going to be an inclusive capitalism investor. that's really what we're looking for. manus: do you adopt lynn's principles when did you out to seek new opportunities? luke: i don't call it inclusive capitalism. i call it patient capital. but i think it means approximately the same thing. i invest for the long term, and that's about building an enduring business, and it's about making sure that

stakeholders are satisfied, because those sorts of companies are more likely to succeed in the long term, and that means things like lude russ ratios of c.e.o. pay to the bottom pay 300 times. it's about making people aligned in their interests so that we are all successful together. francine: the problem is we continue talking about -- shareholders want return three months six months, but we hear what's happening next year? that's the longest term view people will take. how do you change that? lynn: we will not have inclusive came i. if we don't change that. if all investors care about is the next quarter then they're not going to get the kinds of companies you're looking for, which creates an opportunity for those of us who want to invest in companies that are going to be here and be profitable for a long time. so if what you care about is trading or what you care about is next quarter, then i'm afraid that you're not going to

invest in the kind of companies that we are visiting today. manus: who is your poster company? who's doing the best? you're 12 months from the first inaugural grouping of this. who do we look to that encapsulates your principles? lynn: fortunately, it's a list, it's not a terribly long list, but unilever has to be at the top of that list, pepsi charlie mayfield at john lewis those are the first ones. they're all in the room today. manus: i agree with the principles. it's hard. if you have momentum investing, you have hedge funds who are focused on the very short term, and you have to try and cut through that, you have to try to resist the temptation for example, to do stock buybacks, and you have to invest in r&d and you have to invest in the skills of your people, and you

have to look to the long term, and you have to resist the short-term sirens and say we're building a business for you know, 50 years. lynn: mckenzie did a study, and they found that 54% of c.f.o.'s will say no to a net present value accreditive investment for the company, if they're going to miss their next quarterly earnings by one penny. so they will give up the future to hit that earning. is that really the kind of company you want to invest in? francine: how do we know? when what you're talking about is something we're passionate about on this program, but i never really know -- unless we do investigative reporting to look at the supply chains or look at that it's very difficult to have this kind of information. lynn: well, that is a really important point, and that's why there's an entire industry growing up called integrated reporting. metrics are being put in place which investors can use to

challenge management teams, and the truth is, if you want to be a smart investor, you have to engage with the companies, and if a company, you know, won't engage with you or you can't find managers who will commit to you that they'll engage then i think you're going get the short end of the stick. mope you think the younger guys and girls who come into businesses are going to force the change upon companies from the grind up lynn, or has it got to be from the c.e.o. level? lynn: well i believe the reason we have $25 trillion of assets i believe the pressure needs to come both from the investors and from the millennials and from customers. if customers start saying i'm going to buy a magnum instead of xyz ice cream bar because paul is supporting farmers in africa, that's going to be good for unilever, and then it will

also be good for results, that will be good for investors. so it's a virtueous circle if investors c.e.o.'s and customers do this. so every consumer can help make capitalism more inclusive. and, by the way, every beneficiary can do the same thing. the c.e.o. of aviva told me about a pensioner, 35-year-old teacher. she stood up at a meeting, and she said i want you to invest my money in companies that are creating the kind of world i want to invest in. that's clear. that's clear direction. i do think the millennials are great. francine: all right, let's hope. i mean, we were talking to the l'oreal c.e.o. and he was saying the problem is when it comes down to choosing shampoo, they always choose the one that gives you the nicest hair. lynn, thanks so much. [laughter] luke johnson, chairman at risk capital partners, thank you both. manus: coming up, more on the breaking news from france that

one man has been arrested, and this is, of course, after a gas attack and the interior minister is on his way. more on that. we're live with an update. ♪

manus: welcome back to live to bloomberg television streaming on your ipad and bloomberg.com. fran, we have a little bit more

breaking news. francine: it came out in the last 40 minutes, so we understand that one person has died and several have been injured after a terrorist attack on an american products and chemicals gas plant near lyon in southeastern france. for more, let's get straight to our paris bureau. greg, what exactly do we know? how much is this is actually linked to an islamist attack? greg: well, there certainly has been a man arrested, that we know. apparently he was known to -- a suspect was arrested and he was known to the local intelligence officers. yes, as you said, someone drove into a gas plant near lyon. it set off some explosions by apparently ramming some of the facilities with a car. apparently that car did have some kind of a flag. i don't know exactly what type, but some sort of flag indicating links to some sort of radical islamist group. separately, a rather gruesomely decapitated body was found outside the plant. it's presumed the two events are linked, but news is just

coming in. as i said, one dead, several injured from explosions at the plant, and a suspect has been arrested by the police. manus: after charlie hebdo, the security presence in france is palpable. i've been there recently. give us a sense, we've got some ministers on our way to the site we believe, and have you heard anything in regards to security levels in france? greg: well, the interior minister is on his way. the prime minister is in ecuador right now, but he has ordered that security be increased. as you know, security was already on a fairly high level in france, but it's not tended to be around industrial plants. it's been synagogues, mosques, government far sirblingts military facilities not private companies up to this point. so, yes, i'm sure they will try to raise the security level,

but there's a limit to what can be protected. francine: it looks like a terrorist attack. how concerned are you that we're going to see an even more divided front? greg: i wouldn't worry too much. obviously a thing like this, it's one individual t. doesn't sound like it's a mass movement. and it's not the first time this has happened. there have been some -- there were some cases, you probably recall a few months ago of individual people attacking a policeman here attacking a policeman there, so this doesn't seem to -- we don't know any details yet, but right now it seems to be one individual. manus: greg, the other issue is of course, what happens next in terms of reaction.

greg: again, we don't know who this person is, so it's very hard to make any judgment. but yes, she takes any sort of attempt like this to sort of, you know, -- manus: thank you very much.

tom: european leaders must find time saturday to compromise or the e.u. moves to plan b and

apply capital controls. finally a bear market. china stocks plunge. stock market it evaporates. and uber gets no love in paris. uber is beneath hollande. courtney leave had to get out and walk. this is "surveillance." we're live from our headquarters in new york this friday, june 26. right now we have breaking news. it's not on paris, but again in france, and it involves a terror attack. help me out here. this is very much southeast of paris, south of lyon toward glen obal. it's down to the mediterranean sea, and it's somewhere here in a smaller village southeast of lyon. >> exactly. not too far from the swiss border. it may have been some kind of terror attack. one person has been found decapitated and some injured, and there was an explosion. lemond's twitter f